First ever yogurt summit begins today in Albany

View full sizeJohn Berry / The Post-StandardStartup Chobani in Chenango County already accounts for nearly half of the nationâs Greek yogurt market.

By Glenn Coin and Marnie Eisenstadt
Staff writers 

When state government and dairy industry leaders gather in Albany today for the first yogurt summit, they’ll be talking about how to keep a boom from becoming a bubble.

The stakes are high: New York produces about 70 percent of the nation’s $6 billion Greek yogurt market, with two manufacturing plants in operation and two more planned. State and local governments have invested about $50 million into the four Upstate plants. Employment now is about 1,500 people, and that’s expected to increase by 800 when the other two plants go on line.

Now, the state and its farmers are trying to ramp up to meet the growing demand for milk in a state that ranks fourth in the nation in dairy production.

To supply those plants with New York milk, the state Farm Bureau estimates, New York farmers will need to produce 15 percent more milk. Farmers and dairy industry leaders say that will be a challenge.

“This is a case where these new plant openings are bringing to focus the need for raw milk supplies in the region,” said Bruce Krupke, executive vice president of the Northeast Dairy Foods Association. “It’s a real concern.”

Led by the explosive growth of Chobani in Chenango County, New York has quickly became the biggest producer of trendy Greek yogurt. According to one analyst, Chobani accounts for 47 percent of the nation’s Greek yogurt market, and Fage USA in Fulton County about 14 percent.

Chobani started in 2007 with five employees; this year, it was a major sponsor of the Summer Olympics.

In Genesee County, the South American company Alpina Foods is building a 60-employee production plant. Last week, PepsiCo Inc. and the Theo Muller Group from Germany gave details of a 600-employee plant across the street from Alpina that will become the county’s largest employer in a few years.

Yogurt has provided plenty of spinoff jobs. Feldmeier Equipment in DeWitt, for example, has made more than 100 tanks for the companies that make Greek yogurt and employs 390 people – the most in the company’s 60-year history.

Greek yogurt is a thicker, creamier and tangier version that uses about two to three gallons of milk to produce a gallon of yogurt. It’s more expensive – sometimes double the price of traditional yogurt – but has twice as much protein and less sugar.

Part of Greek yogurt’s staying power in the market is that it tastes good and it’s healthy — two qualities that are sometimes hard to find in a single food, said Bob Roberts, interim head of the food science department at Penn State University.

Roberts, too, has joined the trend: He eats a container of Fage full-fat yogurt daily.

Greek yogurt is so hot now that Chobani has even opened a yogurt bar in Manhattan’s trendy Soho neighborhood. Options include yogurt with chopped figs and walnuts with honey drizzled on top.

Greek yogurt now accounts for 35 percent of total American yogurt sales, according to a report by Bernstein Research. That’s up from 30 percent last year and only 4 percent as recently as 2008.

View full sizeEllen M. Blalock / The Post-StandardMadison County dairy farmer Will Soden hasn't seen a boom yet.

Every indication is that Greek yogurt’s growth is not just a fad, said Bill Drake, a professor of food marketing at Cornell University who worked in the food industry for more than 20 years.

“Nothing is ever bullet-proof, but this is one of the biggest things to hit the food industry in a long time,” said Drake, who eats Wegmans Greek yogurt daily.

There is room for more growth in the U.S. yogurt market. In 2011, per capita yogurt consumption in the U.S. was 12.5 pounds — less than a container a week. By contrast, the French each 65 pounds per year.

“We’re still far behind European countries,” said Cary Frye, vice president for regulatory and scientific affairs at the International Dairy Food Association in Washington, D.C.

The boom in Greek yogurt production could lead to milk shortages in the Northeast, said Greg Wickham, chief executive officer of Dairylea Cooperative Inc., at a seminar in March. Wickham said the Greek yogurt market could use up to 6 percent of the total milk production in the Northeast, according to the DairyBusiness news service.

The New York Farm Bureau says the state’s farmers would have to add 180,000 cows to meet the projected demand for milk. New York has about 1.2 million cows now, down from about 1.3 million in 2000.

Individual farmers, however, are reluctant to expand when milk prices are low, a drought in the Midwest has sent corn prices soaring, and a dry summer in New York has slashed hay production.

Some farmers are skeptical of increasing production to meet the growing demand of yogurt.

“The yogurt boom? We haven’t felt any effect from it in our milk checks,” said Will Soden, who milks about 100 cows near Morrisville in Madison County. “I don’t think were benefiting from it.”

View full sizeEllen M. Blalock / The Post-StandardCan Will Soden beef up his herd?

Farm organizations and state and local officials say farmers need new incentives and relief from regulations to produce more milk.

The farm bureau wants to see, among other things, an easing of expensive environmental regulations that limit the size of some farms to 200 cows. U.S. Sen. Charles Schumer wants to let farmers write off the purchases of cows as a capital expense and set up special federal savings accounts.

The state farm bureau believes New York’s farmers can meet the demand.

“These large yogurt manufacturers wouldn’t be coming to Upstate New York if they didn’t believe the supply is here and our farmers had the capability to meet those demands,” said farm bureau spokesman Steve Ammerman.